The Australian Taxation Office (ATO) has revealed it will have three key focus areas this tax time – one of which will be deductions claimed by property investors.
The reason property investors are being targeted is because an ATO review found nine in ten property investors were filing faulty tax returns. Common errors included:
- Leaving out rental income
- Making mistakes with property-related deductions – like overclaiming expenses or claiming for improvements to private properties
As a result, the ATO said it would match investor tax returns with data from home loan providers and insurance providers, to ensure investors don’t omit income or inflate deductions.
“Around 80% of taxpayers with rental income claimed a deduction for interest on their loan, and this is where we’re seeing mistakes,” ATO assistant commissioner Tim Loh said.
“For example, you can’t refinance an investment property to buy personal items, like a holiday to Europe or a Tesla, then continue to claim the interest expenses as a tax deduction.”
The ATO’s other two focus areas will be work-related expenses and capital gains tax.
Do you have questions about tax? Lee and the team at Fidget are ready to help you with all your refinancing needs. And as an independent broker, we don’t charge any fees! Book in a free 15 minute consultation here and let’s make it happen.